Are Long-Term Unemployed Taking Refuge in Disability?

The sharp rise in federal disability rolls in recent years has sparked worry that able-bodied workers are using the system to hide from the weak job market. But new research suggests those fears may be overblown.

Some 8.9 million Americans were receiving federal disability payments in May, up 1.8 million, or 25%, since the recession began in 2007. The big increase is troubling to economists and policymakers because the program, administered by the Social Security Administration, is expensive, and because once workers go on disability, they rarely come off.

Economists have long known that disability filings go up during recessions, but they aren’t sure why. Perhaps the most worrisome theory is that displaced workers are essentially using disability insurance as a form of extended unemployment benefits, either by exaggerating real disabilities or through outright fraud.

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